Africa's oil pool proves tantalising for sharks

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Off the West African coast, the sharks are circling the sleepy "chocolate islands" of Sao Tome and Principe, eager to bite off slices of billions of dollars of hoped-for oil revenues.

One of Africa's poorest nations - so undeveloped that there are no traffic lights in the entire country - is being spoken of as a new Kuwait following recent surveys showing that up to 11 billion barrels of oil lie under its territorial waters.

Prospects of an oil boom in the tiny former Portuguese colony on the Equator have attracted a wave of charlatans and swindlers, eager to cash in, and Sao Tome is keen to avoid becoming the next African country to prove that oil can be more of a curse than a blessing.

Many of the people of Nigeria, Angola, Equatorial Guinea and elsewhere grew poorer as vast oil revenues were stolen by corrupt regimes and businessmen - a situation that Sao Tome's chubby and affable leader, President Fradique de Menezes, says he wants to prevent. Oil has already led to unrest. It was said to have helped foment an attempted coup last July, when a group of disaffected soldiers temporarily seized power from de Menezes.

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He survived and has made progress. He has followed the advice of western economists about how to develop the oil sector, and has presided over a bidding round among oil companies that is seen as the most transparent in African oil industry history.

"This place really is on the map more than it ever has been, but the sharks are already circling in the water," said the former cocoa trader.

"We are trying to keep the process clean, but the pressures are growing stronger and stronger every day. It is becoming horrible."

Every few days, charter planes full of businessmen from Nigeria, Angola and elsewhere fly into Sao Tome's tiny international airport. Most of the visitors want time with the president, who was recently diagnosed with diabetes and for reasons of ill-health has refused to confirm whether he will stand for re-election in 2006.

"Sure, they offer me all kinds of things, but I just listen to what they have to say and show them the door," he said.

Sao Tome, with a population of only 140,000, is also being wooed by the United States, which has deployed a military liaison officer there as part of its war on terrorism.

Britain is also increasing aid money, with £135,000 ($A346,000) going to fund a project of public education about how to use oil revenues.

For now, Sao Tome's government appears clean, but it also seems somewhat out of its depth.

With oil revenues still years away, the country owes £200 million in foreign debt - one of the highest per capita levels in Africa - and remains seriously under-developed.

Cocoa growing might have earned the place the soubriquet of "chocolate islands" and Portugal millions in earnings, but it now generates only £3 million in exports.

The rest of the £30 million national budget comes from foreign aid. This seems likely to be swamped by oil revenues. The rights to explore just one block of seabed will earn Sao Tome £50 million later this year from Chevron-Texaco and there are plenty more blocks for tender.

"If you have high poverty, high expectations of oil revenues and a low level of capacity to deliver, you might have a bomb on your hands," said Rafael Branco, the suave former oil minister.